Opinion
NO. 2013-CA-001285-MR
02-06-2015
SOUTHEAST BULLITT FIRE PROTECTION DISTRICT APPELLANT v. CITY OF SHEPHERDSVILLE APPELLEE
BRIEFS FOR APPELLANT: Allen P. Dodd, III Jacob W. Crouse Richard I. Williams, Jr. Louisville, Kentucky BRIEF FOR APPELLEE: Joseph J. Wantland Shepherdsville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM BULLITT CIRCUIT COURT
HONORABLE RODNEY BURRESS, JUDGE
ACTION NO. 13-CI-00238
OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
BEFORE: ACREE, CHIEF JUDGE; D. LAMBERT, AND VANMETER, JUDGES. VANMETER, JUDGE: The Southeast Bullitt Fire Protection District ("Southeast") appeals from the Bullitt Circuit Court's order granting summary judgment in favor of the City of Shepherdsville. For the following reasons, we affirm in part, reverse in part and remand.
Prior to this lawsuit, the parties were involved in litigation concerning Shepherdsville's failure to maintain a fire department, which was ultimately appealed to this court. City of Shepherdsville v. Nichols Fire Prot. Dist., 2004-CA-001259-MR, 2004-CA-001261-MR, 2006 WL 1509008 (Ky. App. June 2, 2006). The two central issues of the previous litigation were: 1) Shepherdsville's authority to levy fire protection taxes on areas annexed from the named fire protection districts while Shepherdsville allegedly failed to maintain its own "regular fire department;" and 2) compensation to the fire protection districts for any illegally collected taxes.
This court remanded the case back to the trial court, holding that summary judgment in favor of the fire protection districts was improper without a factual determination as to whether the City of Shepherdsville maintained a "regular fire department" as required to levy taxes on residents for fire protection services. In that appeal, the parties did not raise, and the opinion did not address, the legality of the annexations made by the City of Shepherdsville. Following the issuance of that opinion, Southeast and Shepherdsville settled their dispute in December 2011.
The parties' settlement agreement set the boundary between Southeast and the City of Shepherdsville based upon a survey drafted by Brad Armstrong Land Surveying, Inc. The pertinent section of the settlement agreement states the following:
It is understood and agreed that, beginning January 1, 2012, all territory within the boundaries of the Southeast Bullitt Fire Protection District that has, as of the date of
this agreement, been lawfully annexed by the City of Shepherdsville (which territory is described with particularity in the attached Exhibit) shall be considered stricken from the boundaries of the Southeast Bullitt Fire Protection District.(Emphasis added). The settlement agreement also included a waiver of claims:
It is further understood this Release shall terminate all controversy respecting claims for damages heretofore asserted or which might have been asserted and will be binding on the parties, their respective agents, successors, assigns, officers, directors, employees, attorneys, guarantors, sureties, and insurers and any person acting on its or their behalf.(Emphasis added). After the agreement was reached, the trial court dismissed the action on December 22, 2011, and ordered therein:
It is further ORDERED that the boundaries, and areas, of the fire protection district, and department, which are parties to [t]his suit shall be established (as between these parties) as set forth in the survey of Brad Armstrong Land Surveying, Inc., dated December 20 2011 which is attached to this Order.This order has not been appealed or requested to be set aside.
Southeast filed a petition for declaratory judgment on February 26, 2013, asking the court to invalidate fifteen separate annexation ordinances based on Shepherdsville's failure to comply with various statutes governing municipal annexations. Southeast claimed that certain ordinances failed to comply with: KRS 81A.470, requiring annexation ordinances along with an "accurate map and description" prepared by a professional surveyor to be filed with the county clerk and the Secretary of State's office; KRS 81A.410(1)(A), mandating that annexed areas be "adjacent or contiguous" to city boundaries; and KRS 81A.412, governing annexations by consent of a landowner. In response, Shepherdsville filed a motion for summary judgment, which the trial court granted, finding that Southeast's claims regarding the annexation ordinances included in the Brad Armstrong survey were barred by res judicata since the claims had already been addressed by the settlement agreement and order entered by the court, and the annexations completed after the December 2011 order were valid since they were authorized by landowner consent. This appeal follows.
Kentucky Revised Statutes.
On appeal, Southeast argues that res judicata does not apply to its claims, and therefore, summary judgment was inappropriate. First, Southeast claims that summary judgment was premature since the court did not allow any formal discovery before granting summary judgment. Second, Southeast contends that the legality of the ordinances was not actually litigated in the previous litigation. Further, Southeast claims that a majority of the annexation ordinances were not entered until after the settlement agreement and court order were issued, and thus were not subject to the previous litigation. Southeast also maintains that the settlement agreement only applies to territories that were "lawfully annexed," and thus, the annexations can be challenged without infringing upon the final order entered in the previous litigation. Finally, Southeast alleges that the trial court failed to address all of its claims concerning the annexations that followed the settlement agreement.
In response, Shepherdsville alleges that Southeast does not have standing to contest the annexations because only property owners and registered voters in the annexed areas can dispute the annexation of territory in the city. Shepherdsville also claims that res judicata bars all challenges to the annexations described in the Brad Armstrong survey, and consent of the landowners to annexation validates all later annexation ordinances.
CR 56.03 provides that summary judgment is appropriate when no genuine issue of material fact exists and the moving party is therefore entitled to judgment as a matter of law. Summary judgment may be granted when "as a matter of law, it appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor and against the movant." Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 483 (Ky. 1991) (internal quotations omitted). Whether summary judgment is appropriate is a legal question involving no factual findings, so a trial court's grant of summary judgment is reviewed de novo. Coomer v. CSX Transp., Inc., 319 S.W.3d 366, 370-71 (Ky. 2010).
Kentucky Rules of Civil Procedure.
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First, we will address the threshold issue of standing. Shepherdsville claims Southeast does not have standing to contest the annexation ordinances because the fire protection district is not a taxpayer or resident of the annexed areas. We disagree. This court has held that fire protection districts have standing to challenge the annexation of property from within their districts. See Pewee Valley Fire Prot. Dist. v. S. Oldham Fire Prot. Dist., 570 S.W.2d 290 (Ky. App. 1978) (holding that a fire protection district had standing to contest a petition for annexation filed by another fire protection district). Southeast clearly has an interest in whether an area within its fire protection district remains within its coverage area, and thus within its tax base. Hence, we believe Southeast has standing to dispute these annexation ordinances.
Regarding the annexation ordinances that existed at the time of the previous litigation, or more specifically, those areas included in the Brad Armstrong survey incorporated into the settlement agreement, we agree with the trial court that Southeast's claims are barred by res judicata. Res judicata "operates to bar repetitious suits involving the same cause of action[,]" and involves "two subparts: 1) claim preclusion and 2) issue preclusion." Yeoman v. Commonwealth, 983 S.W.2d 459, 464-65 (Ky. 1998). "Claim preclusion bars a party from re-litigating a previously adjudicated cause of action[,]" and "[i]ssue preclusion bars the parties from relitigating any issue actually litigated and finally decided in an earlier action." Id. at 465. "If the two suits concern the same controversy, then the previous suit is deemed to have adjudicated every matter which was or could have been brought in support of the cause of action." Id. Two lawsuits concern the same controversy when they both arise from the same "transactional nucleus of facts." Id.
Claim preclusion applies when three elements are present: identity of the parties, identity of the causes of action, and the action must have been resolved on the merits. Id. Issue preclusion applies when: 1) the issue in the second case is the same as the issue in the first case; 2) the issue was actually litigated in the prior action; 3) the issue was actually decided; and 4) the decision on the issue in the prior action was necessary to the court's judgment. Id. The rule of res judicata is "necessary to the speedy and efficient administration of justice." Id.
First, we consider claim preclusion. In this case, the parties were identical and they agreed on a final and appealable order on the merits. The only issue is whether the cause of action here is the same cause of action litigated in the prior suit. We agree with the trial court that with regard to the ordinances referred to in the settlement agreement and December 2011 court order, the prior lawsuit involved the same cause of action since the two suits involve the same transactional nucleus of facts. The territories to be included in the city were litigated and agreed upon by the parties as reflected in the Brad Armstrong survey that was incorporated into their settlement agreement. Those same boundaries were included in the trial court's final order. Settlement of the overarching controversy over who had the right to collect taxes for fire protection services was contingent upon setting the boundary lines. Presumably, any alleged defects with the annexation ordinances involved in the prior litigation existed when that litigation was pending, and the validity of those ordinances would have affected the boundary lines between the City of Shepherdsville and Southeast's fire protection district. Southeast could have brought the matter of the ordinances' validity to the trial court's attention in the prior litigation, but failed to do so. Therefore, Southeast is now barred from raising this issue that should have been raised in the prior action.
We also believe that issue preclusion acts as a bar to Southeast's claims regarding the ordinances included in the Brad Armstrong survey and identified in the December 2011 order. The issue of which areas were becoming part of the city of Shepherdsville was crucial to the decisions made in the prior litigation. The Brad Armstrong survey was included in the settlement agreement and court order because it set the boundaries between Southeast's district and the City of Shepherdsville. Hence, the same issues of annexation of certain property into the city and the drawing of boundary lines exist in both cases, were actually litigated, decided, and necessary to the court's decision in the prior action. The fact that Southeast made no claim regarding the legality of the annexation ordinances in the prior litigation does not change the fact that the underlying boundary dispute was litigated and decided.
In addition, the waiver of claims provision included in the settlement agreement prohibits any further controversy respecting claims "which might have been asserted" regarding the agreed upon boundary lines. Although the settlement agreement is limited to "lawfully" acquired territories, Southeast accepted the boundaries in the Brad Armstrong survey as correct and lawful, and waived all claims to the contrary then existing when it signed the agreement. Consequently, Southeast is precluded from now arguing that the boundaries depicted in the survey are incorrect since it had a prior opportunity to raise this issue, failed to do so, and then waived the right to raise the issue in the future.
With respect to the annexation ordinances not subject to the prior litigation, specifically ordinances 012-102 through 012-107, the trial court found that the written waivers of the property owners in each annexation, whether signed before or after annexation, authorized the annexations and cured any proposed defects in the notice requirements of KRS 81A.412. This statute states:
A city may annex any area which meets the requirements of KRS 81A.410, if each of the owners of record of the land to be annexed gives prior consent in writing to the annexation. In this event, the city shall not be required to enact the notification ordinance required by KRS 81A.420(1) or to comply with the notice requirements of KRS 81A.425, and it shall not be required to wait the sixty (60) day period provided for in KRS 81A.420(2) prior to enacting a final ordinance annexing the area. When a city has obtained the prior written consent of each owner of record of the land to be annexed, the city may enact a single ordinance finally annexing the land described in the ordinance. If the city has elected to establish the zoning for the new territory pursuant to KRS 100.209 prior to the completion of annexation under this section, the ordinance annexing the territory shall include a map showing the zoning. Upon the enactment of this ordinance, the territory shall become a part of the city.
Southeast argues that because KRS 81A.412 requires waivers prior to annexation, the waivers signed by landowners after their property was annexed are void. Southeast cites Helm v. Citizens to Protect the Prospect Area, Inc., 864 S.W.2d 312 (Ky. App. 1993), and Merritt v. City of Campbellsville, 678 S.W.2d 788 (Ky. App. 1984), which both required a local legislative body to strictly comply with statutory requirements when enacting ordinances. We agree that the trial court erred in granting summary judgment with regard to these ordinances. While Shepherdsville did obtain oral consent prior to annexation, and written consent was ultimately received from each of the landowners, Shepherdsville failed to obtain written consent prior to the annexation as required by KRS 81A.412. Because strict compliance with the statute is required, the ordinances annexing property without prior written consent are void. See Merritt, 678 S.W.2d at 789 ("[t]he rule is that an improperly enacted ordinance cannot stand as being merely voidable. It is void.").
Lastly, Southeast points out that the trial court failed to address its other claims regarding the annexations made after the December 2011 court order. Southeast claimed in its complaint that Shepherdsville failed to comply with KRS 81A.470's filing requirement and KRS 81A.410's requirement that annexed lands have adjacent or contiguous boundaries. The trial court made no mention of these alleged deficiencies in its order granting summary judgment. On this issue, we agree that the trial court prematurely granted summary judgment if the parties were not afforded the opportunity to conduct discovery on these issues. "[Summary judgment] is proper only after the party opposing the motion has been given ample opportunity to complete discovery and then fails to offer controverting evidence." Suter v. Mazyck, 226 S.W.3d 837, 841 (Ky. App. 2007). An issue of fact clearly remains as to whether or not the City of Shepherdsville complied with the requirements of KRS 81A.470 and 81A.410. Accordingly, we remand this issue back to the trial court with instructions to permit discovery and hear arguments on this contention prior to making a final ruling.
For the foregoing reasons, the order of the Bullitt Circuit Court is affirmed in part, reversed in part, and this case is remanded for further proceedings consistent with this opinion.
ALL CONCUR. BRIEFS FOR APPELLANT: Allen P. Dodd, III
Jacob W. Crouse
Richard I. Williams, Jr.
Louisville, Kentucky
BRIEF FOR APPELLEE: Joseph J. Wantland
Shepherdsville, Kentucky